Advanced Financial Reporting and Controlling for International Business

2024/2025

Type: Mago-Lego

Delivered by: School of Finance

When: 1 module

Open to: students of one campus

Instructors: Aglaia Kokurina

Language: English

ECTS credits: 3

Contact hours: 28

Full Syllabus

Abstract

This course is designed for graduate students who have some experience with reporting methods and practices. The course covers advanced financial transactions that take place in multinational organizations, coupled with reporting and control procedures for such cross-border exchanges. First, students learn about global reporting issues that multinational organizations face and how organizational controls work to mitigate risks associated with foreign transactions. Course participants further delve into hedging activities of a global company. In the second part of the course reporting requirements and control activities for foreign currency-denominated assets and liabilities, as well as insurance contracts are thoroughly examined. Finally, students get familiarized with the concept of a functional currency and master translation methods for foreign currency-prepared financial statements.

Learning Objectives

Learn and analyze reporting and control procedures for such cross-border financial transactions.
Formulate and apply control activities for foreign currency-denominated assets and liabilities

Expected Learning Outcomes

1. Describe the global financial markets and their relation to financial reporting.
2. Explain the objective of financial reporting.
3. Identify the major policy-setting bodies and their role in the standard-setting process.
4. Discuss the challenges facing financial reporting.
5. Explain the application of the core principles of accounting.
6. Explain importance of financial controls over international financial transactions and foreign assets.
1. Understand concepts related to foreign currency, exchange rates, and foreign exchange risk.
2. Account for foreign currency transactions using the two-transaction perspective, accrual approach.
3. Understand the definition of a derivative and the types of risks that derivatives can manage
4. Understand the structure, benefits, and costs of options, futures contracts, forward contracts, and swaps
5. Explain the difference between receivable or payable measurement and denomination.
6. Record foreign currency–denominated sales and purchases at the initial transaction date, period-end, and the receivable or payable settlement
1. Explain reporting requirements for derivative instruments that are not designated as a hedge.
2. Understand the definition and purpose of a cashflow hedge.
3. Describe the circumstances in which a derivative is reported as a cash-flow hedge.
4. Formulate the definition and purpose of a fairvalue hedge
5. Perform reporting calculations for a derivative that is accounted for as a fair-value hedge.
1. Perform reporting procedures for a cashflow-hedge contract from inception through settlement.
2. Perform reporting procedures for a fair value-hedge contract from inception through settlement
3. Explain the special derivative accounting related to hedges of existing foreign currency–denominated receivables
4. Explain the special derivative accounting related to hedges of existing foreign currency–denominated payables
5. Explain reporting requirements for foreign-currency borrowings.
1. Explain fundamental relationship between risks and financial controls.
2. Identify organization- and transaction-related risks and corresponding financial controls.
3. Describe main business processes in companies.
4. Formulate control activities over receivables and payables in international businesses.
5. Identify financial and organizational risks related to reporting derivative contracts.
1. Explain the concepts of positive and negative translation adjustments.
2. Distinguish between financial operations that bear transaction exposure and financial position with balance sheet exposure.
3. Explain the theoretical base of the current rate method.
4. Explain the theoretical base of the temporal method.
5. Formulate limitations of the current rate and temporal methods.
1. Translate a foreign subsidiary’s financial statements into its parent’s reporting currency using the current rate method.
2. Translate a foreign subsidiary’s financial statements into its parent’s reporting currency using the temporal method.
3. Calculate translation adjustment
4. Define remeasurement gain or loss is and its calculation.
5. Assess the rationale of hedging investment in foreign operations.
6. Design financial controls activities to prevent and detect material misstaments in foreign currency financial reports.
1. Indentify terms of insurance contracts.
2. Distinguish among various types of insurance.
3. Formulate reporting requirement for insurance contracts purchased by an international business.
4. Formulate reporting requirement for insurance contracts sales in insurance companies.
5. Assess risks of material misstatement pertaining to insurance contracts and design corresponding control acitivities.

Course Contents

1. Global Reporting Issues and Control Activities of International Business
2. Foreign Currency Transactions
3. Derivative Instruments Reporting
4. Hedge contracts
5. Organizational Controls for Foreign Currency Denominated Assets and Liabilities
6. Insurance Contracts
7. Translation of Foreign Currency Reporting I
8. Translation of Foreign Currency Reporting II

Assessment Elements

In-class assignment
Решение кейса
Project

Interim Assessment

2024/2025 1st module
0.3 * In-class assignment + 0.4 * Project + 0.3 * Решение кейса

Bibliography

Recommended Core Bibliography

ACCA : audit and assurance (AA), , 2020
ACCA approved. Practice & revision kit : Paper P7. Advanced audit and assurance, , 2017
Advanced accounting, Hoyle, J. B., 2009
BPP Learning Media (Firm). (2017). ACCA Paper F7 (Vol. Eleventh edition). London: BPP Learning Media. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1515138
Felix I. Lessambo. (2021). International Finance : New Players and Global Markets. Palgrave Macmillan.

Recommended Additional Bibliography

Burnett, S., Williams, D., & Illingworth, L. (2013). Reconsidering the Knowledge Audit Process: Methodological Revisions in Practice. Knowledge & Process Management, 20(3), 141–153. https://doi.org/10.1002/kpm.1414
Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. (2017). International Business: The New Realities, Global Edition (Vol. Global edition). Boston: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1419679
Exchange rates and international finance, Copeland, L. S., 2014

Authors

Monastyrskaia Aglaia Dmitrievna

Course Syllabus